Trends

Retail automotive aftermarket product sales are strong, but trouble may be on the horizon.

Retail sales of automotive aftermarket products have been fairly strong this summer, following a weak winter and spring.

Cautious optimism is the best way to describe sales through the end of the year. Despite strong retail sales, this strength has yet to find its way through the supply chain at the manufacturer level. We forecast a sales increase through fall, but this depends on several cloudy economic factors.

One factor is gas prices. Record price levels for a gallon of gas were set this summer—as much as 10-percent higher than last year and slightly ahead of official federal forecasts. Prices have backed down slightly from this summer's peak, but government forecasts call for a gas price increase—as much as 20-percent higher than fall 2006 prices.

What this means to you: The average retailer should see an improvement in business conditions from a year ago, but higher gas prices will continue to be a wild card through the end of the year.

A WORLD OF PARTS AND ACCESSORIES IN SEARCH-AUTOPARTS.COM

The new Web site, Search-Autoparts.com, has a wealth of free information designed for qualified retailers selling specialty parts.

The process of selling specialty parts used to require an experienced salesperson with a good memory looking through perhaps dozens of manufacturer catalogs. Offering several intuitive look-up options, Search-Autoparts.com has simplified the process and enables the user to quickly close a sale.

Powered by CatalogRack.com from Direct Communications, Inc. (DCi), Search-Autoparts.com allows users to access the industry's most comprehensive product database, including more than 400,000 part numbers from nearly 200 of the specialty-parts industry's most widely distributed brands.

More than 64,000 year/make/model/engine applications through the 2008 model year are covered in Search-Autoparts.com, making it the industry's most comprehensive database. About one-quarter of parts numbers included are universal parts intended to fit any vehicle and can be searched by keyword, material, dimensions, and color, etc.

What this means to you: A specialty-parts retailer can locate and sell more parts by relying on Search-Autoparts.com. Even an inexperienced counterperson can quickly locate parts to close a sale.

SOMEONE TURNS 16 EVERY DAY

Automobile dealers and specialty-parts retailers have an opportunity to increase sales from a large, emerging market—the American youth. According to U.S. Census Bureau estimates, the population of Americans ages 15-24 is growing more than two percentage points faster than the rest of the population. Today, there are more than 26 million licensed drivers age 24 and under representing 13 percent of all drivers on the road—an increase of nearly 1.7 million drivers from 10 years ago.

A recent family experience with two newly licensed teenagers highlighted the lack of marketing performed by automobile dealerships to attract these impressionable new buyers.

There is sometimes a tendency to assume Generation Y or "millennial" (born 1977-1995) drivers prefer foreign makes in the sport-compact (or compact-performance) market. While there is certainly a strong preference for Hondas and Toyotas, according to Specialty Equipment Market Association (SEMA) research, most young drivers are behind the wheel of a Ford or Chevy, with Pontiac and Dodge rounding out the top six vehicle makes.

Gen-Y drivers are eager to personalize their vehicles with audio-system upgrades, aftermarket exhaust systems, tires and wheels, and exterior styling accessories as the top choices. Safety is certainly a strong issue, too—if parents are involved in the buying decision.

Young drivers are not as brand loyal as their parents, which is considered both a marketing problem and an opportunity for automobile dealers and specialty-parts manufacturers.

Reaching this market requires a non-traditional approach. Friends, family, and Internet research influence most buying decisions. Automobile dealers who want to reach youth buyers must post inventory on their own Web sites or one of the large car-buying sites, such as Edmunds.com or Cars.com. These buyers are not looking through the newspaper classified ads.

Back to our recent family experience, some automobile dealers did a great job marketing online, offering clear vehicle descriptions, a listing of safety features or ratings (great for parents looking over a buyer's shoulder), and free Carfax vehicle history reports. Some clearly did not get it, offering little or no online information, confusing descriptions, expired listings, and no photography. Our experience ended up a positive one; our salesperson spent half an hour after the sale showing new drivers the most basic requirements experienced drivers take for granted, including how to fill the gas tank and check the oil.

What this means to you: A prospective new customer turns 16 every day. Licensed drivers 24 and under are a large part of the market—better than one out of every 10 people who drive past your business every day.

This market requires what some businesses consider a non-traditional approach—relying heavily on the Internet. Don't force your business to try to be "hip;" just present information new buyers look for and be prepared to educate as well as sell.

Satisfied youth customers will eagerly pass on recommendations to their friends in the form of text messages on their phone—what some of us used to call "word-of-mouth" advertising.

Jon Hedges of Hedges & Company is a long-time veteran of the automotive aftermarket specializing in database marketing, strategy, and research. He can be reached at (330) 474-1650, or via the Web site www.HedgesCompany.com.